Investors looking for stocks in the Financial - Consumer Loans sector might want to consider either OneMain Holdings (OMF) or Sallie Mae (SLM). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
OneMain Holdings has a Zacks Rank of #2 (Buy), while Sallie Mae has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that OMF has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
OMF currently has a forward P/E ratio of 8.81, while SLM has a forward P/E of 8.84. We also note that OMF has a PEG ratio of 0.43. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SLM currently has a PEG ratio of 0.77.
Another notable valuation metric for OMF is its P/B ratio of 2.01. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, SLM has a P/B of 2.69.
These are just a few of the metrics contributing to OMF's Value grade of A and SLM's Value grade of C.
OMF sticks out from SLM in both our Zacks Rank and Style Scores models, so value investors will likely feel that OMF is the better option right now.
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OneMain Holdings, Inc. (OMF): Free Stock Analysis Report SLM Corporation (SLM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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